CommerceWest Bank (OTCBB: CWBK) reported earnings for the three months ended June 30, 2011 of $343,000 or $0.07 per basic common share and $0.07 per diluted common share, compared with net income of $68,000 or $0.01 per basic common share and $0.01 per diluted common share for the three months ended June 30, 2010, an increase of 600%. Net income for the six months ended June 30, 2011 was $725,000 or $0.16 per basic common share and $0.16 per diluted common share, compared with net income of $502,000 or $0.11 per basic common share and $0.11 per diluted common share for the six months ended June 30, 2010, an increase of 45%.

Financial performance highlights for the three months ended June 30, 2011:
  • 404% increase in net income
  • 71% increase in non-interest income growth
  • 5% reduction in non-interest expense
  • 15% increase in non-interest bearing deposits

Financial performance highlights for the six months ended June 30, 2011:
  • 44% increase in net income
  • 41% increase in non-interest income
  • Allowance for loan losses as a percent of CommerceWest Bank loans was 3.99%, an increase of 2% from the prior year
  • A fortress balance sheet, with a tier 1 leverage ratio of 12.94% and total risk based capital ratio of 22.27%
  • Nonperforming loans as a percent of total assets are 0.75% down from 3.75% or 80% year over year
  • Nonperforming assets as a percent of total assets are 1.40% down from 4.50% or 69% year over year
  • Strong liquidity with $140 million in cash and liquid investment securities

Mr. Ivo Tjan, Chairman and CEO, said, “We are pleased with our financial performance results. The Bank has made tremendous progress addressing post acquisition asset quality issues during the first half of 2011. The team has done an outstanding job, with non-performing loans as a percent of total assets down to 0.75%, an 80% improvement year over year. Net income growth, improved asset quality, decreased overhead expenses and especially our growth in non-interest income was a key factor in our results.

“The management team will spend the second half of 2011 focused on organic growth, cost control, and effectively managing our balance sheet,” stated CEO Ivo Tjan. “Top line revenue growth being a key driver. The team will focus on improving the net interest margin and profitability by deploying excess liquidity to drive operating efficiencies, which will also improve our efficiency ratio. We see opportunities in the marketplace today, as evidenced by our second quarter deposit growth, to bring on new profitable client relationships. We have assembled a talented group of individuals to execute our strategic plans for risk management, organic growth and continuing to enhance our business model to achieve future success.”

Total assets increased $8.7 million as of June 30, 2011, an increase of 3% as compared to the same period one year ago. Total loans decreased $51.2 million as of June 30, 2011, a decrease of 27% over the prior year. Cash and due from banks increased $21.8 million or 46%. Total investments increased $42.7 million or 88% from the prior year.

Total nonperforming assets decreased $9.3 million as of June 30, 2011, a decrease of 68% as compared to the same period one year ago. The Bank’s Texas Ratio was 14.38% as of June 30, 2011, a decrease of 17.77% or 55% from one year ago.

Total deposits increased $14 million as of June 30, 2011, an increase of 6% from June 30, 2010. The Bank reduced borrowings outstanding by $6 million compared to the same period one year ago. The Bank’s liquidity position to total assets ratio improved from 18% as of June 30, 2010 to 73% as of June 30, 2011. Stockholders’ equity on June 30, 2011 was $44.5 million, an increase of 2% as compared to stockholders’ equity of $43.7 million a year ago.

Provision for loan losses for the three months ended June 30, 2011 was $60,000 compared to $900,000 for the three months ended June 30, 2010, a decrease of 93%. Provision for loan losses for the six months ended June 30, 2011 was $160,000 compared to $1,525,000 for the six months ended June 30, 2010, a decrease of 90%. The Bank’s allowance for loan losses as a percent of total loans was 3.99% for the CommerceWest Bank portfolio on June 30, 2011 as compared to 3.91% on June 30, 2010, an increase of 2%.

Non-interest income for the three months ended June 30, 2011 was $528,000 compared to $308,000 for the same period last year, an increase of 71%. Non-interest income for the six months ended June 30, 2011 was $1.2 million compared to $866,000 for the same period last year, an increase of 41%. Non-interest expense for the three months ended June 30, 2011 was $2,580,000 compared to $2,708,000 for the same period last year, a decrease of 5%. Non-interest expense for the six months ended June 30, 2011 was $5,384,000 compared to $5,448,000 for the same period last year, a decrease of 1%.

Capital ratios for the Bank remain well above the levels required for a “well capitalized” institution as designated by regulatory agencies. As of June 30, 2011, the leverage ratio was 12.94%, the tier 1 capital ratio was 21.01%, and the total risk-based capital ratio was 22.27%.

CommerceWest Bank is headquartered at 2111 Business Center Drive in Irvine, CA, with Regional Offices in Orange County, Riverside County, Los Angeles County and San Diego County. We are a full service business bank and offer a wide range of commercial banking services, including concierge services, remote deposit solution, full-service internet banking, lines of credit, term loans, commercial real estate lending, SBA lending, and full cash management.

Mission Statement: CommerceWest Bank will create a complete banking experience for each client, catering to businesses and their specific banking needs, while accommodating our clients and providing them high-quality, low stress and personally tailored banking and financial services.

Please visit www.cwbk.com to learn more about the bank. “BANK ON THE DIFFERENCE”

Statements concerning future performance, developments or events, expectations for growth and income forecasts, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to, loan production, balance sheet management, expanded net interest margin, the ability to control costs and expenses, interest rate changes, financial policies of the United States government and general economic conditions. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any forward-looking statements contained in this release to reflect future events or developments.

SECOND QUARTER REPORT - JUNE 30, 2011 (Unaudited)            
     
BALANCE SHEET Increase
(dollars in thousands) June 30, 2011 June 30, 2010 (Decrease)
 
ASSETS
Cash and due from banks 68,765 46,942 46 %
Securities 91,449 48,703 88 %
 
Loans 137,880 189,056 -27 %
Less allowance for loan losses (3,967 ) (4,781 ) -17 %
Loans, net 133,913 184,275 -27 %
 
Bank premises and equipment, net 740 785 -6 %
Other assets 19,188   24,626   -22 %
Total assets 314,055   305,331   3 %
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Non-interesting bearing deposits 73,902 64,300 15 %
Interest bearing deposits 193,752   189,369   2 %
Total deposits 267,654 253,669 6 %
Total borrowings 500 6,500 -92 %
Other liabilities 1,431   1,476   -3 %
269,585 261,645 3 %
Stockholders' equity 44,470   43,686   2 %
Total liabilities and stockholders' equity 314,055   305,331   3 %
 

CAPITAL RATIOS:
Tier 1 leverage ratio 12.94 % 12.40 % 4 %
Tier 1 risk-based capital ratio 21.01 % 17.91 % 17 %
Total risk-based capital ratio 22.27 % 19.17 % 16 %
 
STATEMENT OF EARNINGS     Three Months Ended   Increase   Six Months Ended   Increase
(dollars in thousands except share and per share data) June 30, 2011   June 30, 2010 (Decrease) June 30, 2011   June 30, 2010 (Decrease)
 
Interest income 3,192 3,928 -19 % 6,502 8,280 -21 %
Interest expense   737     809   -9 %   1,455     1,671   -13 %
Net interest income 2,455 3,119 -21 % 5,047 6,609 -24 %
Provision for loan losses 60 900 -93 % 160 1,525 -90 %
Other non-interest income 528 308 71 % 1,222 866 41 %
Other non-interest expense   2,580     2,708   -5 %   5,384     5,448   -1 %
Earnings before income taxes 343 (181 ) 290 % 725 502 44 %
Income taxes   0     (249 ) -100 %   0     0  

0

%
Net earnings   343     68   404 %   725     502   44 %
 
Basic earnings per share $ 0.07 $ 0.01 600 % $ 0.16 $ 0.11 45 %
Diluted earnings per share $ 0.07 $ 0.01 600 % $ 0.16 $ 0.11 45 %
Return on Assets (annualized) 0.45 % 0.09 % 400 % 0.48 % 0.31 % 55 %
Return on Equity (annualized) 3.10 % 0.63 % 392 % 3.33 % 2.33 % 43 %
Efficiency Ratio 83.78 % 79.01 % 6 % 83.45 % 71.94 % 16 %
Net Interest Margin 3.68 % 4.50 % -18 % 3.82 % 4.51 % -15 %

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